Senate tries to put wrangling aside to rescue Postal Service from insolvency

Sen. Jon Tester talks about the outrage over outrageous government spending and why the USPS is now under scrutiny.

By Tom Curry, msnbc.com National Affairs Writer

Updated at 3:05pm ET The Senate struggled Thursday to push forward a bill to restructure the U.S. Postal Service, but still lacked accord on which amendments the senators would be allowed to offer.

“We’re really very, very close to getting something done,” said Majority Leader Harry Reid Thursday afternoon. “Our main issue now is whether there will be a 50-vote hurdle or a 60-vote hurdle,” he said.

The Postal Service is headed for financial collapse and perhaps for a taxpayer bailout. Whether Congress can avert this outcome and save it is the question that the Senate has been debating this week as it considers a bipartisan agency restructuring bill.

Reid warned on the Senate floor Thursday, “Those of you who are holding up the bill because you don’t like it, you may not like what the result of having no bill is.”

He also said, “If there is no bill, the post office will be drastically hit.”

Reid and his colleagues face a deadline: the Postal Service has agreed to a moratorium on closing any postal retail facilities until May 15, to allow Congress time to devise a way to resuscitate an enterprise that, if it were in the private sector, would be on the brink of bankruptcy or liquidation.

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Sen. Joe Lieberman, I-Conn., seen in this February 2012 file photo, said it was "unthinkable" that the Postal Service could cease operation.

If Congress does not act by that deadline, the postmaster general will close more than 200 mail processing plants and take other cost-cutting steps.

But there’s discord among senators over what “saving” the Postal Service would really mean, whether it’s worth saving, and whether small towns from Maine to Montana will lose the post offices that serve as their community anchors.

“Its failure would deliver a crushing blow to our economy at a time when the economy is already fragile and it would be particularly harmful to people living and working in rural America,” said Sen. Susan Collins, R-Maine, the chief Republican co-sponsor of the restructuring bill.

The legislation’s other chief sponsor, Connecticut Sen. Joe Lieberman, an independent who caucuses with Democrats, said, “This bill will keep the Postal Service alive and I think it will keep it well and put it on the path to surviving forever – but in a different way …”

Noting that the Postal Service still delivers 563 million pieces of mail each day, Lieberman said it was “unthinkable” that it could cease operation, calling it “not just a relic of the 18th century but a pivotal part of the 21st century.”

The Lieberman-Collins bill would use an $11 billion refund from Federal Employee Retirement system to offer buyouts of up to $25,000 to postal workers. Half of the Postal Service workforce of 557,000 employees is eligible for full or early retirement, Lieberman said. If 100,000 were to retire, the Postal Service would save $8 billion a year.

The bill also relaxes the tight schedule for Postal Service payments into a fund for retiree health care, easing its cash flow problem. And for at least two years, it would halt the end of Saturday mail delivery, as other cost-cutting measures were implemented.

Action on the bill was temporarily derailed when Sen. Rand Paul, R-Ky., tried on Tuesday to get a vote on an amendment to the postal bill aimed at cutting off U.S. aid to Egypt unless Cairo ends prosecution of American citizens pursuing pro-democracy action in the African nation.

Leaders of each party were working to reach a deal to allow votes on a limited number of amendments to the legislation. If there’s no deal on amendments, there will be a vote to move ahead on the bill Thursday morning and Republicans might block it if they can’t get the chance to vote on amendments they want.

Although Cairo, Egypt is long way from Cairo, Kentucky, Paul defended his effort to get a floor vote on his amendment.

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Sen. Rand Paul, R-Ky., speaks at a news conference on the 2013 budget March 8, 2012 in Washington, DC.

“I was never preventing any action (on the postal bill). I just want a 15-minute vote,” he told reporters on Wednesday. The Postal Service, he said “is losing $4 billion a year and I think the American people would like to know why we’re sending money to Egypt when we can’t fund our own enterprises in this country.”

According to a report issued Tuesday by the Government Accountability Office, Congress’s fiscal watchdog, transactions at postal retail facilities have decreased by 18 percent over the past five years, while mail volume has declined by more than 20 percent. In fiscal year 2011, the Postal Service had a $5.1 billion loss and did not make its $5.5 billion retiree health benefits payment to the federal government.

“Approximately 80 percent of its retail facilities do not generate sufficient revenue to cover their costs,” the GAO reported, yet “the number of USPS-operated retail facilities, about 32,000, has remained largely unchanged” over the past five years.

An opponent of the Lieberman-Collins bill, Sen. John McCain, R- Ariz., said, “It is very clear that Congress and the Postal Service cannot make decisions.” The only solution, he said, would be an independent commission (akin to the Base Realignment and Closure Commission which closed military bases) to shut down redundant or money-losing facilities.

Mocking the Lieberman-Collins bill’s two-year study of cost control measures before eliminating Saturday mail delivery, McCain said sarcastically during Tuesday’s floor debate, “Now isn’t that marvelous! Two years to study! It’s delaying what is absolutely necessary and that is to have five-day-a-week delivery.”

Illustrating the home-state concerns felt by almost all senators on closing postal facilities, Collins passionately defended a mail processing center in Hampden, a town in northern Maine. Closing it would mean that a letter sent from one town in northern Maine to another town just ten miles away would take a 600-mile roundtrip, she said.

“That (Hampden) plant could be downsized, but it should never be closed” she insisted.

Karen Bleier / AFP - Getty Images

Senator Susan Collins, R-Maine, is seen during the Senate Interior, Environment and Related Agencies Subcommittee hearing in this June 23, 2010 file photo on Capitol Hill.

NBCPolitics.com asked Collins Wednesday whether her die-hard defense of Hampden didn’t precisely illustrate the problem – few senators or House members are willing to allow a facility in his or her state or district to be closed -- so few are ever shuttered.

“The problem is there are (under current law) not (legal) standards when a center or a post office should be closed,” she explained. The Lieberman-Collins bill would set such standards. “Our bill does not say that not a single post office or processing plant can be closed. Nor do we dictate that certain numbers should be closed.” Instead the bill sets what Collins called “logical standards” to determine which ones should be shut.

Under the 1970 Postal Reorganization Act, the Postal Service was supposed to be financially self-sufficient, covering its costs through postal rates and fees. But in its previous reform efforts, Congress has shown that it manages and sometimes micromanages the Postal Service, even as it advocates self-sustainability.

This week’s GAO report blamed Congress itself for making it impossible for the Postal Service to operate as a profitable private-sector firm would.

The GAO said, “On one hand, USPS is supposed to ‘act like a business’ and be self-financing, but on the other hand, it is restricted by law from making decisions that businesses would commonly make, such as closing unprofitable units.” For example, under federal law, no small post office can be closed solely for operating at a deficit.

Paul seems to see the Postal Service as a lost cause, calling the Lieberman-Collins effort was “too little, too late. I always ask people would you like to buy the Postal Service? If we could just sell it to somebody,” he mused and then pondered another idea: “Declaring bankruptcy – I don’t know if you could do it technically – but there’s been some discussion of that.” Declaring bankruptcy would allow the Postal Service to abrogate contracts with its labor unions “and start all over” with new contracts, he said.

But the Kentucky freshman senator acknowledged, “People are emotional” about closing post offices. “People come to me … Republicans who say, ‘I supported you (in the 2010 election), I’m part of the Tea Party, but don’t close my post office.’”